Correlation Between Interpublic Group and Aspen Technology

Can any of the company-specific risk be diversified away by investing in both Interpublic Group and Aspen Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Interpublic Group and Aspen Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Interpublic Group of and Aspen Technology, you can compare the effects of market volatilities on Interpublic Group and Aspen Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Interpublic Group with a short position of Aspen Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interpublic Group and Aspen Technology.

Diversification Opportunities for Interpublic Group and Aspen Technology

-0.47

Correlation Coefficient

Interpublic Group  Aspen Technology

Very good diversification

The 3 months correlation between Interpublic and Aspen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Technology and Interpublic Group is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Interpublic Group of are associated (or correlated) with Aspen Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Technology has no effect on the direction of Interpublic Group i.e., Interpublic Group and Aspen Technology go up and down completely randomly.

Pair Corralation between Interpublic Group and Aspen Technology

Considering the 90-day investment horizon Interpublic Group of is expected to under-perform the Aspen Technology. In addition to that, Interpublic Group is 2.76 times more volatile than Aspen Technology. It trades about -0.08 of its total potential returns per unit of risk. Aspen Technology is currently generating about 0.1 per unit of volatility. If you would invest  24,433  in Aspen Technology on October 7, 2024 and sell it today you would earn a total of  661.00  from holding Aspen Technology or generate 2.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Interpublic Group of  vs.  Aspen Technology

Interpublic Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interpublic Group of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Aspen Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Aspen Technology is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Interpublic Group and Aspen Technology

The main advantage of trading using opposite Interpublic Group and Aspen Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interpublic Group position performs unexpectedly, Aspen Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aspen Technology will offset losses from the drop in Aspen Technology's long position.

The idea behind Interpublic Group of and Aspen Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.